July 07, 2012

Paul Moreno's "short history" of the taxing power

At the May meeting of the American Bar Association Tax Section, Jaspar (Jack) Cummings (a well-renowned tax practitioner who has written extensively on the Supreme Court's tax jurisprudence) and I gave a joint keynote speech for the Tax Section's Diversity Committee. Our address covered various aspects of Supreme Court jurisprudence past, present, and expected future. While we disagreed on many interpretative details, there was one thing that we were both quite clear on: the insurance mandate in the Affordable Care Act should (and, we predicted, would) be upheld as a constitutional exercise of the taxing power.

Today's Wall Street Journal ran an op-ed by Paul Moreno, titled "A Short History of Congress's Power to Tax" (July 7, 2012). The problem with the history is that it mentions a few items from the Constitutional Convention history, and then selectively wanders through a few Supreme Court cases. It ultimately asserts that Robert's opinion for the majority on the health insurance in the Supreme Court's decision on the constitutionality of the Affordable Care Act in NFIB v. Sibelius was "dangerous to constitutional government" because it supported an "unlimited taxing power."

Maybe historians (Moreno is a historian at Hillsdale College) should leave tax analysis to tax experts. Let me say this here for the record: the Supreme Court would have looked utterly foolish if it had failed to uphold the mandate as an exercise of the taxing power. As noted by another commentator, failure to recognize the mandate's legitimacy under the taxing power would suggest that it was unconstitutional to tax to insure those under age 65, while Medicare is constitutional for taxing those at 65 or over. Further, it would make an impossible distinction between the insurance mandate's penalty provision and what could be called the Internal Revenue Code's marriage mandate penalty provision". That is, the income tax sometimes taxes singles more than married couples, resulting in what is called a "singles penalty"--higher taxation on earnings to a single person than would result for that person in a married couple. (There is also sometimes a marriage penalty. All this depends on how the progressivity of the Code rate structure interacts with the fact that we don't treat every "tub on its own bottom".)

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Paul Moreno's "short history" of the taxing power

At the May meeting of the American Bar Association Tax Section, Jaspar (Jack) Cummings (a well-renowned tax practitioner who has written extensively on the Supreme Court's tax jurisprudence) and I gave a joint keynote speech for the Tax Section's Diversity Committee. Our address covered various aspects of Supreme Court jurisprudence past, present, and expected future. While we disagreed on many interpretative details, there was one thing that we were both quite clear on: the insurance mandate in the Affordable Care Act should (and, we predicted, would) be upheld as a constitutional exercise of the taxing power.

Today's Wall Street Journal ran an op-ed by Paul Moreno, titled "A Short History of Congress's Power to Tax" (July 7, 2012). The problem with the history is that it mentions a few items from the Constitutional Convention history, and then selectively wanders through a few Supreme Court cases. It ultimately asserts that Robert's opinion for the majority on the health insurance in the Supreme Court's decision on the constitutionality of the Affordable Care Act in NFIB v. Sibelius was "dangerous to constitutional government" because it supported an "unlimited taxing power."

Maybe historians (Moreno is a historian at Hillsdale College) should leave tax analysis to tax experts. Let me say this here for the record: the Supreme Court would have looked utterly foolish if it had failed to uphold the mandate as an exercise of the taxing power. As noted by another commentator, failure to recognize the mandate's legitimacy under the taxing power would suggest that it was unconstitutional to tax to insure those under age 65, while Medicare is constitutional for taxing those at 65 or over. Further, it would make an impossible distinction between the insurance mandate's penalty provision and what could be called the Internal Revenue Code's marriage mandate penalty provision". That is, the income tax sometimes taxes singles more than married couples, resulting in what is called a "singles penalty"--higher taxation on earnings to a single person than would result for that person in a married couple. (There is also sometimes a marriage penalty. All this depends on how the progressivity of the Code rate structure interacts with the fact that we don't treat every "tub on its own bottom".)